The achilles heel of both political parties, waiting to be exploited by reformers

Summary: The two parties in America stand as invincible barriers to political reform. They own the high ground; they control all the gates. No set of attractive policies will overcome them. Yet they have points of vulnerability exploitable by determined reformers who seek not just better doctrine but also organizational superiority. We can defeat giants, for they act stupid and slowly. Today we discuss one kind of advantage, part of a long series about ways to reform America (see links at the end). Not the fun of slogans and magic policies, but the specifics of building change.

Democrats & Republicans: almost invincible

And every eye Gazed as before some brother of the sky. — The Odyssey, Book VIII, line 17.

Contents

Their weakness

Lessons Learned

For More Information

.(1) Their weakness

Both Democrats and Republicans are “reality-based communities”, with a clear understanding — of each other. Both parties have in themselves the seeds of greatness, but are hobbled by their confidence in their beliefs, their preference for orthodoxy over truth, an unwillingness to hear criticism, and a disinterest in growth.

“Epistemic closure” protects the members of each faction from learning. Information comes only from in-group sources, with heterodox thought discouraged by group norms. The Democrats see this clearly in the Republicans. The GOP sees this clearly in the Democrats. So each party understands that the other’s worldview has little credibility.

This is most often described as a problem of the Republicans. But the Democrats are equally afflicted. Perhaps the best-known example: their belief that its portfolio of Treasury bonds funds Social Security. Eminent economists, such as Brad DeLong (Prof Economics, Berkeley) and Paul Krugman confidently state this absurdity. As if a bond is an asset when held by the issuer. Federal government pays social security; it cannot fund one obligation with another obligation. You might as well write an IOU to yourself for a trillion dollars and ask to join the Fortune 500.

Ignoring this data, Democrats make ever-more-dire warnings about the climate horrors to come, mostly unsupported by little but speculation. Worse than tales about the future, they often describe local events, attributing them to global warming or rising sea levels — in areas where the official records show little warming or rising sea levels for decades or generations (sometimes back to the 1940’s; these things are not globally homogeneous). Republicans mock this folly; Democrats wall their minds to these facts by shouts of “denier”.

This does not mean that Social Security must die, or that the world has not and will not warm. Just as Republicans’ faux history, faux economics, and love of fake quotes does not mean that rising government debt and erosion of social norms are not problems. Rather, these examples show how both factions’ views of reality are clouded. This leads to weak reasoning, easily countered by their opponents. As a result the public’s confidence in the major parties and the government has slowly fallen during the past few decades (e.g., see this NBC poll).

Let’s consider this as an opportunity to draw outside the lines. Political organizations compete not just in terms of such things as policies and style, but also their operational effectiveness. Political parties, like armies, have somewhat unique dynamics that typically result in a low level of effectiveness. But even so, higher competence can provide a competitive advantage.

Might an organization work without the usual ideological blinders — the refusal to see contrary facts, and love of pretty falsehoods from other members of the tribe? These things maintain internal coherence and social cohesion, but diminish both credibility to outsiders and the organization’s efficiency.

Reformers could start with a belief in openness and acceptance of criticism as standards of behavior. “Self-criticism” was a doctrine of communist parties (samokritika in Russia; jiǎntǎo in China), but corrupted into a brutal method of control. But it could work. The exact mechanisms matters little, and are easily implemented for those with the will to learn. Organizations from the Marines to Boy Scouts routinely do lessons learned sessions. While difficult to make these part of the organization’s culture, it can provide a lasting source of competitive advantage. Especially against the insular, largely dysfunctional main US parties.

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30 thoughts on “The achilles heel of both political parties, waiting to be exploited by reformers”

” best-known example: their belief that its portfolio of Treasury bonds funds Social Security. Eminent economists, such as Brad DeLong (Prof Economics, Berkeley) and Paul Krugman confidently state this absurdity. As if a bond is an asset when held by the issuer. Federal government pays social security; it cannot fund one obligation with another obligation.”

In my discussions with Tea Partiers, Libertarians, even AnCaps, I have seen little evidence that any of them really grasp this. Social Security will always be funded by taxes. It is only a question of whether it is a payroll tax or the general tax revenues, or the proportion of each. As long as we have folks stating that Congress has raided the trust fund we will know that reality has not been accepted.

Greenspan and the commission perhaps perpetrated the worst example of smoke and mirrors, to date. I wonder if he will one day admit his error in that regard.

Fabius, if someone commenting here ridiculed a proposition endorsed by experts in the relevant field of equivalent standing to that of Professors Krugman and DeLong, would you not suggest that it is more likely that the commenter misunderstands either the proposition or the sense in which the experts agree with it than that what those experts believe is “absurd” and “daft”?

Of course the Social Security Trust Funds are an accounting fiction. So is anything involving a dollar sign.

Whether we can pay Social Security benefits depends on—and only on—whether we have the resources, skills and labor available to fulfill the demand that will be created when those benefits are spent without degrading some other part of our economy in a way that is unacceptable to us.

All money is an accounting fiction. (Even gold bars are of little value if there are no goods and services available to be traded for them.) However, we live by accounting fictions. The way that Social Security is “funded” affects how it is debated (as well as how the “deficit” is computed and debated). It interacts with the rules politicians make for themselves that decide when the government pays, when it is “unable” to pay, and when reconsideration is due. Whether we will pay Social Security benefits depends significantly on how we think of them.

“Of course the Social Security Trust Funds are an accounting fiction. So is anything involving a dollar sign.”

I cannot imagine what that means. I strongly suggest you not attempt to run anything — family, business, government — on that basis.

Money, and accounting (tracking money) are math. Hard reality.

As for these experts, we can evaluate them on their explanations for their statements. About SS they give none. Certainly not references to the peer-reviewed literature, which is the gold standard — and the basis on which I say scientists should be listened to. In the posts on this subject I do not advocate credentialism.

Here we have the opposite: experts speaking on the basis of research, experts saying obviously false things for political effect.

There is a long history of scientists playing on the political field, trading on their reputation as scientists to say false things. Stephen Jay Gould’s books provide hundreds of examples. Today’s climate wars provide many more. Fortunately today we have easy access to the literature to check.

“Whether we can pay Social Security benefits depends on—and only on—whether we have the resources, skills and labor available to fulfill the demand that will be created when those benefits are spent without degrading some other part of our economy in a way that is unacceptable to us.”

It seems a slightly different way of saying what Peter Bernstein said in 1998 regarding Social Security and its alternatives including private investment accounts. “Retirement funds are merely conduits — collateral on future claims. He concluded by saying ” The financial arrangements are not the solution. They are part of the problem. The solution is in economic prosperity in the long run.”

Saving and investment (in the financial sector sense, not the real economy sense) create future claims on goods and services. If, at some particular time, goods and services are available, we can choose to distribute them even if there are no pre-existing claims. On the other hand, if there are pre-existing claims, but we have failed to build the capacity to meet the demand resulting from those claims, something troublesome must happen (e.g., inflation, default, possibly falling standards of living if we are determined to preserve the value of pre-existing claims in preference to the welfare of current workers).

The Social Security trust funds are, in a sense, a benign form of pre-existing claim, since the government can control the rate at which they must be “drawn down” by changing the benefit rules: essentially no different than what it would have to do anyway if our economy cannot support existing benefit levels.

I agree that these funds were a dirty trick. They justified an increase in regressive payroll taxes in return for providing three decades of political cover for benefits. The winners and losers on that one aren’t too hard to figure.

“Saving and investment (in the financial sector sense, not the real economy sense) create future claims on goods and services.”

They do not create NET new claims, because the financial sector is an intermediary. Social security is not part of the financial sector. The rest of your comment implies that Social Security is a massive burden beyond what the US economy can withstand. There is a massive body of research on this subject, which shows that this is a myth — created purely by conservatives to provide an excuse to cut benefits.

“They do not create NET new claims, because the financial sector is an intermediary.”

I see your point. I made a typical amateur’s mistake: assuming “all other things being equal” when it is mathematically impossible for all other things to be equal. The picture has to be more complex than I suggested. (My understanding is that the financial sector is the source of the bulk of the broad “money supply,” though, so I’m not so sure it can’t be the source of increased net claims, by increasing the total nominal wealth in existence.)

“The rest of your comment implies that Social Security is a massive burden beyond what the US economy can withstand.”

That’s certainly not what I was trying to say. I meant only to claim that whether a certain standard of retirement benefits can be met by an economy at point X in time depends only on the condition of the economy at point X in time—not on what has been “saved.” The ability of an individual to finance his or her retirement is dependent on savings (“all other things being equal” being valid when thinking about an individual); the ability of the nation’s workforce to support the retirement of the elderly and disabled depends on the productivity of the economy. The distribution of savings can facilitate or impair the mechanics of getting an appropriate amount of money into the hands of retirees, but it has nothing to do with what the economy can or cannot support.

“Evidence? Sounds like a myth to me.”

Argh. I did make plenty of errors in that comment. I confused the trust funds (which have existed since the inception of Social Security) with the changes made pursuant to the recommendations of the Greenspan Commission. I haven’t found what I would call an “unbiased” discussion of those changes, but here is one account: Greenspan’s Fraud: Overtaxing the Poor; Reducing Taxes on the Rich. (Or Social Security Isn’t a Pension Plan But: “In fact, the use of the Special Treasury Obligation/Trust Fund was meant to disguise the reality of the huge tax cuts handed to the wealthy in the 1980s in a lovely bipartisan way. The unfairness and stupidity of the tax cut for the rich was hidden by the increase in the FICA taxes imposed only on income from work, and only modestly affecting the income of the rich. Meanwhile, the rich funded the increasing Reagan deficits by lending money to the Treasury that should have been paid in taxes.”)

It was the Reagan/Greenspan reforms to Social Security which I meant to say (had I not mistakenly thought they created the trust funds) were designed to justify an increase in regressive payroll taxes while insulating benefits from political challenges for about thirty years. I don’t mean to imply that benefits should have been cut; but as other kinds of government assistance were reduced in accordance with the dominant ideology, the trust-fund system with the Reagan/Greenspan reforms made it easier to treat Social Security payments as something different… until about now, as the primary surplus has turned negative.

I don’t believe you are clear about the role of savings in a modern economy. But you raise a vital point that is more important than another round in the thickets of macroeconomics.

“It was the Reagan/Greenspan reforms to Social Security which I meant to say (had I not mistakenly thought they created the trust funds) were designed to justify an increase in regressive payroll taxes while insulating benefits from political challenges for about thirty years.”

I think that makes the GOPs policies more complex than they are.

For generations they have sought to reduce spending on the public (I.e., not them) AND shift the tax burden from them to us. To do so they have used various stories at different times, usually bogus and often contradictory. They loved Reagan and a Bush tax cuts that sent the deficit into orbit. Now it’s time to cut social spending to cut the deficit.

The result of this intensive propaganda about basic economics is an economy with inequality at near-record levels (perhaps record levels) AND a public hopelessly confused about simple economics.

The effect of well-financed propaganda over generations to confuse people is A New America.

“Might an organization work without the usual ideological blinders — the refusal to see contrary facts, and love of pretty falsehoods from other members of the tribe? These things maintain internal coherence and social cohesion, but diminish both credibility to outsiders and the organization’s efficiency.”

I like this concept but wonder how it could be effective.

I suspect the members of such an organization would have to have no political ideology at all. Other than perhaps pragmatism.

In some sense the members would have to view themselves as being outside the box.
Can such a group maintain cohesiveness as well?
What would be their goal? Political action? Simply educating the electorate?

Was the Simpson-Boles commission a similar thing? It could not achieve consensus. Was that because members brought their ideologies with them?

Actually, I believe the “Hobgoblin of little minds” behavior of our status quo defending political parties will be their undoing. Leadership in one sense is simply offering credible paths forward, meaning policy choices based on logic and reason plus brutal honesty about the facts. As true in Washingtons day as it is today.

“Actually, I believe the “Hobgoblin of little minds” behavior of our status quo defending political parties will be their undoing.”

Perhaps so, although they’re doing well now. Also, their structure is a hierarchical one (although, as usual in our society, disguised). So the behavior you point to is, IMO, a social control over the little people — not a restraint on the 1%.

“Leadership in one sense is simply offering credible paths forward, meaning policy choices based on logic and reason plus brutal honesty about the facts. As true in Washingtons day as it is today.”

I believe our leaders see a different America than you do. You refer to offering people a path. They see sheep that are guided by trained dogs. Shepards make noises to calm (sing sings) or arouse their flock; they do not attempt to reason with them. The sheep have no interest in abstract facts and logic.

Patience Fm:
“First they ignore you, then they laugh at you, then they fight you, then you win.” – Mahatma Gandhi …
We are still in the ignore stage. Things are progressing nicely IMO. Hang tough and hope for (nervous) laughter. Next.

Whenever you see quotes like this, attached to a person but not tied to a larger context (book, speech, etc) they’re usually misattributions. For some reason people just love to find inspiring quotes and attribute them to famous people, and as soon as they do it’s treated as gospel truth.

The quote probably began life in a union report as:

And, my friends, in this story you have a history of this entire movement. First they ignore you. Then they ridicule you. And then they attack you and want to burn you. And then they build monuments to you. And that, is what is going to happen to the Amalgamated Clothing Workers of America.” General Executive Board Report and Proceedings [of The] Biennial Convention, Amalgamated Clothing Workers of America, 1914.

But it’s much more fun to think it came from Gandhi. As if merely having a great man say it makes it true all by itself. Which it isn’t. Stripped of the labor union rah-rah, a more accurate quote probably is:

First they ignore you. Then they continue to ignore you. Then, if you manage to reach a point where they stop ignoring you, they attack you. Then you die.

I was thinking much smaller. Not about philosophy, even the subset of political philosophy, or values (anachronistic as it is to use with regard to Socrates).

In the context of political organization, this post discusses a group’s willingness to recognize facts. Quite simple facts. Broken groups fight facts,usually to their detriment (the damage depending on the scale and duration of the war with reality, and the group’s vitality).

Hence the mention of a simple mechanism, that when routinely used as part of a group’s culture can help it adapt quickly , the fast learning that provides a competitive advantage.

Note, going back to Duncan’s point, that Plato learned from Socrate’s experience. He concluded that democracies were a dangerous place for philosophers.

Many people argue that the government could not default on its debt to Social Security because of the effect such action would have on financial markets and the nation’s public image. If the government held the same kind of real bonds that are traded on world markets, this would be true. Public-issue, marketable U.S. Treasury bonds are default-proof, and that is the kind of bonds that the Social Security surplus revenue was supposed to be invested in. If this had been done, Social Security would be in fine shape today.

Dr. Smith is arguing that the government wrote itself the wrong kind of IOU!

Much of Dr. Smith’s analysis is on the mark, but he misses (or at least glosses over) the fundamental reason that Social Security benefits are not protected: future benefits cannot be protected, since the government is always free to change the rules. Depending on economic conditions, it is possible that it will have no practical choice but to change the rules. He quotes Alan Greenspan:

“As a nation, we owe it to our retirees to promise only the benefits that can be delivered,” Greenspan said. “If we have promised more than our economy has the power to deliver to retirees without unduly diminishing real income gains of workers, as I fear we may have, we must recalibrate our public programs so that pending retirees have time to adjust through other channels.”

but he seems to miss the essential accuracy of this observation. How likely it is that our economy will be unable to deliver those benefits is an open question, largely dependent on how determined we are to continue mismanaging it for the benefit of the few at the expense of the many. However, Greenspan’s recognition that what matters is what our economy can deliver at a given point in time, and not what is saved in any sort of trust fund, is exactly correct.

Government cannot “save” tax revenues for the future, nor “invest” them in the sense of buying securities. The Social Security trust funds are indeed an accounting fiction, but so is any other scheme to “save” government revenue for the future. Government can invest in the future by making choices that lead to a more productive future: e.g., supporting basic research; raising the quality and availability of education; promoting health care that prioritizes keeping Americans healthy over profiting when they’re sick.

As a nation, we have failed woefully to invest in our future, but that has nothing to do with bonds and trust funds; and it is real investment—not which accounting fiction we choose—that can improve the prospects for an aging population.

I believe you are referring to generational accounting, but are not stating it correctly. See Wikipedia.

A generation cannot create a debt burden for a later generation, nor pass on savings to descendents. That is simple accounting, since every debt creates an offsetting credit. This DOES NOT apply to subsets of a generation. Like the government. The government’s debts are those of the nation as a whole, while the offsetting credits (government bonds) are owned not by everyone — but a subset (mostly the wealthy).

So while social security is not a burden for future generations, it is a problem for future generations in that it must be funded through taxation or borrowing — or reduced (i.e., a soft default) benefits of some sort — such as direct dollar reduction, taxation of benefits, means-testing eligability, or inflation. The people relying on the benefits will not be the ones paying for it.

Conversely the government — like any other subset of the nation — can save either
(a) by buying assets (i.e., ownership of real assets, or financial interests in other entities),
(b) by reducing debt (paying down the national VISA card, so it can be charged up as the boomers retire).

What’s lost in all this hysteria is the realtively small size of the unfunded government pension liability (social security and government pension plans) compared to the cost of Medicare-Medicaid-Tricare (aprox 1/2 of total US health care expenditures). Due to our fantastically dysfunctional AND expensive health care system, these systems will become unaffordable in their current configuation in the next decade or so. That is a large problem, but one easily solved by every other major developed nation. And so can be solved by us by adoption some combination of their well-proven systems.

That’s not happening now because we are exceptional. Exceptionally stupid.

This comment thread looks the same as most on posts about reforming America: almost completely ignores the point of the post.

In this case, comments rehash the mythology of social security — most of which has been busted a million times before.

Discussion of the mechanics of reform are boring. Few people are interested. Especially as participation might create an implied obligation to act (in terms of cognitive dissonance).

Threads at Leftist and Rightist websites about armed revolution get a thousand comments. Yes, to the barricades comrades! Take back America! Then we’ll discuss if in the NEW STATE fire stations should be privatized or funded by wealth taxes. … Now back to our videogames …

This comment thread looks the same as most on posts about reforming America: almost completely ignores the point of the post.

In this case, comments rehash the mythology of social security — most of which has been busted a million times before.

Discussion of the mechanics of reform are boring.

As I was first reading this post, before I got to the comments, I thought: We’re going to end up debating which of the cited fallacies are really fallacies. I don’t think it’s because “discussion of the mechanics of reform are boring,” though; I think it’s because we don’t know what to think or say about the mechanics of reform. We have no reference point.

People with any interest in politics can hardly help but to have stocked a mental cellar full of opinions about the central assertions of the dominant ideologies. It’s a relatively quick job to dust one off, make a few minor adjustments to fit the immediate topic of discussion, and jump in. But what is there in the common stock of “knowledge” about reform in a nominal constitutional democracy that is failing to maintain fidelity to the needs of the people? The American Revolution is ancient history—you might as well be talking about Moses and the burning bush or Jesus walking on the water. Such miracles happened in the long ago… they’re not supposed to happen now, and anyone who suggests they can is a lunatic, a fraud, or worse.

It seems to me that most contemporary plans for change amount to:

1. Agree on a set of insights and principles, and subject everyone you can reach to a recitation of same.
2. ???
3. Reform!

We don’t have much experience talking about step two.

Sometimes I think it makes sense to hammer away at individual issues. Most people won’t really care one way or the other; if the tide begins to turn, they’ll not resist. Treatment of homosexuals is well along that path; acceptance of marijuana might be going that way, though I think it’s too soon to be confident.

But the big ones—e.g., management of the economy, foreign relations and our use of the military, the triumph of the national security state over the Bill of Rights—these things are important to large parts of the existing power structure. They can’t be addressed without reforming the power structure itself. Those in charge certainly have no intention of consulting the public about such matters.

It appears to me that this power structure is sufficiently sophisticated to defend itself quite well from the threat of change “within the system.” Yet outright rebellion, destroying the system, strikes me as entirely irrational. The chances of success would be slim; the chances that success would lead to the formation of a system that was better are vanishingly small.

So… where might there be a crack in the system? And how do we make use of it before it is noticed and patched?

Perhaps, as you suggest in this post, the major parties’ commitment to ideology over information is an Achilles’ heel; but is this a weakness of those in power, or just of the useful idiots they present for our bi-annual wrestling matches?

Anyway, as a marketing strategy, bullshit seems to work better than truth… especially when you offer a choice of flavors.

I should have written “is this a weakness of the system,” not “is this a weakness of those in power.” I don’t mean to imply that there is a conspiracy of masters of the universe; there are powerful people who fill those roles, but the roles are a product of the system itself, not the people who occupy those positions. That’s what makes the system so resilient: it doesn’t depend on the proclivities of individuals, but only on its own capacity to filter, select and constrain those who have enough influence to make any difference.

The Integral theory movement is probably the most well know marginal movement attempting to advocate for “trans-partisan” politics, specifically as a response to the failures of the New Left and the failures of Postmodernism. The problem is that the institution builders within the movement have tended to draw their strengths from republican-capitalist orientations, with howls of complaint from Green-Progressives and Radicals.

All parties are unhappy with the lack of direct action, perhaps except the “monetizers” and their followers.